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February 11, 2002

American Bar Association Deals Blow To UCITA

WASHINGTON D.C. - Coming at a crucial time for state legislatures across the country, an American Bar Association (ABA) working group has issued a critical report on the controversial proposed uniform law known as the Uniform Computer Information Transactions Act (UCITA).

The working group's recommendations, recently reported to ABA's Board of Governors, declared that UCITA was so flawed it "would not achieve the principal objective that a uniform law is supposed to achieve, namely, the establishment of a high level of clarity and certainty."

"We certainly hope the working group's report will give the states yet another reason to keep UCITA off their legislative agendas," said Miriam Nisbet, president of Americans for Fair Electronic Commerce Transactions (AFFECT), a group of consumers, businesses, computer professionals and libraries who oppose UCITA.

The ABA working group also took issue with the confusing and often contradictory text of the proposed law, stating UCITA is "daunting even for knowledgeable lawyers to understand and apply." The working group's report predicts UCITA would continue to generate controversy that would only be resolved by litigation and recommends the act be completely redrafted.

Further, the ABA Report criticized UCITA's encouragement for a licensor's withholding of terms until after purchase. "I'm glad that the ABA working group stood up on behalf of consumers in the digital age," said Fred von Lohmann, senior staff attorney of the Electronic Frontier Foundation. "The working group's recommendations recognize that, in a world of license agreements, consumers should have certain rights: they should be able to figure out what law applies, they should see the terms of a contract before parting with their money, and they should not be deprived of the benefits of state consumer protection laws."

Passage Deemed "Almost Impossible"

The working group's report was signed by eight of its nine members. The sole dissenting voice was that of Donald Cohn, who stated in his minority report that "the failure of the ABA to report out UCITA as being worthy of enactment or consideration by the states will arm UCITA's opponents with a weapon that will make the passage of UCITA in any new state legislature almost impossible."

UCITA failed to pass in any states during the 2001 state legislative sessions while three states passed so-called "bomb shelter" legislation designed to protect citizens from UCITA-driven contracts. Currently, only the state of Washington, which introduced a UCITA bill 2001, has a bill pending this session and no other states have indicated plans for introducing it in 2002.

Under pressure from consumer and business groups, the National Conference of Commissioners on Uniform State Laws (NCCUSL) the body that originally drafted UCITA has attempted to address some of UCITA's many flaws by offering a long list of amendments.

"Even though NCCUSL has offered 19 amendments, mainly to appease objections from consumers, they do not substantively improve the act," said Gordon Pence, Intellectual Property Counsel for Caterpillar Inc. "Those amendments offer little aid to businesses, particularly small businesses, as they do not qualify for the protections afforded to consumers."

Attorneys General from 34 jurisdictions have advised NCCUSL that the Attorneys General had no confidence that any amendments could sufficiently improve UCITA to make it acceptable (Letter from Attorneys General to NCCUSL, November 13 2001).

The American Law Institute, an early partner with NCCUSL during the drafting of UCITA, withdrew its support for the act in 1999, citing "significant reservations about both some of (UCITA's) substantive provisions and its overall clarity and coherence" (The ALI Reporter, Spring 1999).

Background on UCITA

UCITA was originally drafted by the National Conference of Commissioners on Uniform State Laws (NCCUSL) as an addition to the Uniform Commercial Code (UCC.) The UCC is intended to make commercial law uniform in all 50 states, and NCCUSL products are typically non-controversial. However, UCITA is an exception, with serious opposition expressed by state Attorneys General, the Federal Trade Commission, and leaders of societies of technical professionals.

UCITA dramatically shifts the balance of contract law in favor of software sellers and against the businesses and consumers who buy it. Even with the changes recently recommended by the UCITA Drafting Committee, UCITA will:

  • Allow software publishers to prohibit public criticism of their products;
  • Allow software publishers to prohibit companies from transferring software from a terminated employee to a new hire;
  • Allow software publishers to prohibit the transfer of software from one company to another, even in the course of a merger or acquisition;
  • Allow software companies to decide where disputes will be heard - one company's software agreement requires disputes be settled in Ireland;
  • Allow software publishers to avoid liability for damage caused by defects in their software (even if those defects are known by the seller and undisclosed to the buyer);
  • Bind purchasers to terms disclosed only after the purchaser pays for the software;
  • Threaten the kinds of library services now permissible under law, including inter-library loan, distance learning programs, archiving and preservation.

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AFFECT, Americans for Fair Electronic Commerce Transactions, is a broad-based coalition of industry leaders, libraries and consumer organizations dedicated to educating the public and policy makers about the dangers of UCITA, the Uniform Computer Information Transactions Act. AFFECT supports improvements in high-quality computer and information technology and the growth of fair and competitive markets in the United States and believes that UCITA is a dangerous, anti-business and anti-consumer measure that will have a devastating impact on the American economy and the development of electronic commerce and new technologies.

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